WA industry groups reject backpacker tax

WAFarmers has once again strongly opposed the introduction of the proposed backpacker tax, following a call for public submissions as part of the multi-departmental Federal Government review.

The WAFarmers submission, which focused heavily on backpacker numbers, represented a Western Australian whole-of-industry approach, and was informed by our own consultation and experiences in addition to that from the Australian Hotels Association, Gascoyne Publican, The Job Shop, WA Fishing Industry Council, WA Pomegrowers, Wines WA, 2 Workin Oz, and VegetablesWA.

While information was presented for each of these key industries, there was one common theme: if the current proposals before the government are implemented, towns, businesses and local economies will be severely impacted, in addition to the national economy which would see a productivity deficit to the value of more than $320 million.

The proposed backpacker tax has the potential to shrink the pool of available and willing overseas workers, and the option of filling the void with the domestic market ignites reservations and concerns for producers. Growers are not confident that domestic sources will satisfy the demand, skills or service the locations required to ensure the industry sustains current production rates.

For the year 2015-16, data from the Department of Immigration has that:

  • There were 214,643 working holiday visas issued in Australia in 2015-16.
  • 195,673 of these visas were 417 visas, while 18,970 were 462 visas, demonstrating an overall decline of eight per cent.
  • There has been a 12 per cent decrease in second year visas issued to working holiday makers.
  • 33,363 working holiday makers embarked on a regional employment placement, which has experience a decline of 21 per cent over three years from June 2014.

 Further, a survey of 1,434 backpackers in 2015 by the National Farmers Federation following the government’s initial announcement of a 32.5 per cent backpacker tax found:

  • 69 per cent knew about how Australian taxes worked before they travelled to Australia.
  • 86 per cent thought they were eligible for the tax free threshold.
  • 52 per cent had decided not to stay working in Australia after 1 July 2016.
  • 84 per cent had since heard of backpackers changing their plans about coming to Australia.

 With an industry that is being encouraged to service both domestic and international demand, labour shortages are leading to dramatic loss of production which is hindering the sector’s potential profitability which is hoped to be worth some $100 billion within the next 15 years.

The impact the decline of backpackers has on agriculture is further highlighted not only by the difficulty of attracting local content, but the declining numbers of employees in agriculture which has slipped from 345,000 in 2000 to 298,400 in August 2015.

The Western Australian industry approach agreed there was the requirement for backpackers to pay tax, and while the collective group acknowledged there would be severe side effects of ‘tinkering’ with this tax system, WAFarmers and the WA stakeholder groups believed a much softer approach than the current proposal needed to be considered. 

A tax rate of 19 per cent, as put forward by the NFF, achieved by the deactivation of the tax free threshold would be a fair and acceptable compromise to the backpacker and the employer, and would see approximately $315.7 million returned to government over a four year period.

Further, WAFarmers and the WA industry stakeholder groups encourage the Federal Government to review the 88 day requirement to qualify for a second 417 or 462 visa, assess whether superannuation should be payable to working holiday makers and look to raise the thresholds on countries with capped visa entry.

WAFarmers looks forward to seeing the results of the review once available publicly. If you would like to view the WAFarmers and the WA industry stakeholder group submission, you can find it here.


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